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Saturday, 16 April 2011

Forex is currency trading which, in a nut shell, is a way to make a living from the movement in the value of a countries currency against another countries currency. We trade currency pairs such as the British Pound and the American Dollar or the Euro and the American Dollar and we can make our money by either buying or selling our chosen pair.

There are many ways to trade Forex. Popular ways include the use of indicators such as pivot points whereby a trader looks at historical movements in certain pairs and uses this information to predict when a certain pair may move in a certain direction. Trading this way often entails the trader being in a trade for quite a long time - an hour or so to, in some cases days or longer.

A second popular way is for a "professional" to send out buy and sell advice to you via email and other electronic communication. The trader then reacts on the news.

A third way is for an investor to send the amount he wishes to invest to a company / computer programme and allow them to invest on the trader's behalf. There is no risk to the company / computer programme although this is not the way it is marketed.

A fourth way is scalping or reactive trading. A trader will wait patiently until a movement in the currency occurs which he deems quick enough to cover the brokers spread and for the trader to make a few pips. Trades tend to take less than a minute and profits are paid instantly.

I opted to learn the latter because I didn't want to have the stress of leaving trades on for long periods of time. To me that would lead to stress and stress tends to lead to bad decisions. Additionally, to me the thought of having to wait for someone else to tell me when to buy or sell a currency seems bizarre - what happens if that individual retires? Or makes an error? Why can't that individual train me to do what they do?

The thought of sending my hard earned money to some entity to trade for me does not seem to me to be a business. What skills do I learn from that? And what happens if / when my money is lost?

Scalping a few pips here and there by following a tried and trusted system is without a doubt the simplest and safest system I have found to trade. As an individual working from home I wanted a system that, once I had learnt it, would give me financial freedom with a lifestyle that did not tie me to a computer all day.

For more information about FOREX training please visit FOREX Training Course -A site aimed at helping you understand FOREX trading.

There are many ways that you can earn a living from home, and a very popular way that people are doing this is with forex day trading. Like the stock exchange, you are going to be making many different transfers and trades throughout the day, but instead of trading different stocks you are going to be trading different currencies and exchanging them into other currencies to try to make a profit off of them.

To learn how to do this you are going to want to take a few courses online, or read some literature on trading, just so you can make sure that you know what you are doing. There are many different resources that you can take advantage of, and some of them are even going to be free. You just need to take the time to read them.

There are many free ebooks online that you can read that will teach you how to begin forex day trading, and there are also many different websites that perform this service that you can practice trade on, and they will have tutorials as well. Although there is going to be a lot of money to be made, you aren't going to want to make large investments in the beginning when you first start learning.

It may take you a while to get the hang of things, so don't risk losing a lot of money. As time goes on you are going to find that you are a lot more comfortable with what you are doing, and then you can make larger investments and trades. There are a few different sites where you can monitor the market, and they are also going to be cheap to trade on as well.

Read the different reviews on the internet to see what people have to say about the different broker sites to find out which one has the best reviews. You will need to either create a bank account or link one of your bank accounts to the site so that you have the funds to start trading. Set aside a specific amount of money that you want to use when you are first learning.

Forex day trading is a great way for you to work from home, and make a great living if you can get the hang of it. Take advantage of all of the different teaching programs and tutorials that are readily available, and start out with small investments. The more comfortable you get, the more money you will invest, and the more income you will make.

When considering the question "is Forex a scam" the first thing that comes to my mind is the old saying "Never invest in anything that you don't understand." Follow this advice and you are unlikely to fall victim to scams. Another saying worth consideration: "If it seems too good to be true, it probably is." A third thing to remember is that you should know your risk tolerance and investment goals. Are you comfortable with the idea of losing your money? When will you need this money? You might be more risk tolerant at 20 than you would be a few years from retirement.

Foreign Exchange trading, or Forex, is the trading in international currencies. Is Forex a scam? The currency markets are a large and liquid market, attracting speculative short term traders. International currency markets are risky and reliant on rumors, world news, and politics. Foreign Exchange markets have been described as a zero sum game. There is a fixed supply of currency on the world markets and for one person to make money on a Foreign Exchange market trade, someone else must lose money.

There are two types of traders in Forex; market makers are the large banks and investment houses, and retail Forex brokers are smaller players. Cash FX is the shorthand name of the commodities traded. Retail Forex brokers can be the subject of scams. Although the market is legitimate and regulated by laws such as the Commodity Futures Modernization Act of 2000, it is common for people to lose money more than they gain. Broker's commissions, and sales of software programs and information are more surefire ways money is made in the realm of Forex trading. So the answer to the question "Is Forex a scam?" might be yes, and it might be no.

Forex Avenger is one of the best all around programs to succeed in Forex. There is another review of the program here: Forex Avenger Review [http://www.squidoo.com/forex-avenger-scam] Or if you're still unsure about which Forex program is right for you, be sure to check out http://www.forexreviewbuzz.com [http://www.forexreviewbuzz.com?tid=ez] to find the Forex program that's right for you.

Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading.

Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.

Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.

Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.

Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.

Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.

Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.

No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.

Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.

The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.

Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.

Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.

Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.

Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.

Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.

Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.

Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.

Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.

Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.

Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.

Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.

Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.

The clues are in the details - The bottom line on youraccount balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.

Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.

Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.

Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.

Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.

Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.

Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.

Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.

Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).

One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.

Wrong Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.

Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.

A veteran of online trading, John Gaines offers the financial services industry his perspectives and expertise on a variety of trading systems and financial instruments, including forex, CFDs, futures, options and stocks.